Posted By:Infra Bazaar
Supply Chain Management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinated and integrated approach that flows both within and among the companies.
Effective supply chain management has become a crucial competitive advantage across the globe today where organizations are faced with poor infrastructure, volatile customer demand and rising cost of logistics and inventory. Thus an enterprise can become more competitive by re-engineering its supply chain. Business success also depends on the organization’s dynamics with suppliers and downstream partners.
A vital pre-condition for a successful application of SCM tools are interfaces to the existing Enterprise Resource Planning (ERP) and Production Planning and Control (PPC) systems. Supply Chain Management tools source master and transaction data from external ERP systems, process them and return the results to the external systems.
Benefits of Supply Chain Management
1. Improvement of delivery dependability and customer orientation
2. Sourcing, Purchasing and Reduction of stocks
3. Cost reduction within the procurement, manufacture and distribution network
4. Decrease of processing time with better inventory management
5. Avoidance of the bullwhip-effect
The idea of supply chain management is new so far as linkages and combination are concerned. There has been integration of logistics of moving and downstream activities over the years. The supply chain management process itself is one that starts and finishes with the customer. Director at Dupont, Gattorna and Walters, argues that “(supply chain) it requires looking at your business as one continuous process. This process absorbs such traditional functions as forecasting, manufacturing, purchasing, distribution and sale marketing in a continuous flow of business interaction. Gone are the functional 'stove pipes' of business activity, instead departments are planned as a pipeline that stretches between a company's suppliers and its customers".
E-commerce and Its Impact
E-commerce technology provides information and visibility throughout the supply chain. The e-commerce enabled supply chain attempts to link the end consumer with all the stake holders associated with the material / asset/ goods etc transaction. Manual procurement processes are going to be obsolete in coming days. It will help employees and consumers save time and cost without compromising on quality.
As companies expand into new markets, they begin to work with traditional competitors and compete with suppliers and customers. The Supply Chain Management growing awareness that product excellence does not guarantee competitive advantage and profits, many firms are in search of a way to increase profits through better management of the supply chain network using technology.
The sudden increase in electronic commerce methods and technology will have impact on all aspects of supply chain management. Companies that recognize the workings and business issues of electronic commerce will find their way to use them to their benefit while others who don't, will be left behind. Once a company moves towards electronic commerce, management, business processes and market structure will be forever changed. In order to maximize the effectiveness of e-commerce, the supply chain management structures must be well integrated with the other useful policies of the firm. Moreover, this requires cooperation between management and employees, as these business processes will change the traditional, hierarchical structure to a more virtual or network structure.